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A Trump administration clampdown on foreign takeovers of American technology companies threatens to derail another of Broadcom’s acquisitions.
Back story: Broadcom announced in July that it planned to buy CA Technologies, a maker of enterprise software, for nearly $19 billion. That was the first deal the company had announced since its $117 billion bid for Qualcomm was blocked by the Trump administration over national security concerns. (At the time, Broadcom was based in Singapore. It has since moved its headquarters to California.)
The news: Washington appears ready to crack down further on deals involving foreign buyers. The Trump administration has said it plans to empower the Committee on Foreign Investments in the United States, a government panel that reviews transactions involving overseas companies, to look at more kinds of investments. Senator Rand Paul, Republican of Kentucky, specifically called for a national security review of the CA Technologies deal on Wednesday.
What to watch: Because Broadcom has relocated to the United States, it’s unclear whether the CA Technologies deal can be reviewed by the government takeover panel. The companies say it cannot; Mr. Paul insisted on a review taking place anyway. Broadcom also issued a statement saying that a memo purportedly from the Defense Department calling for a review of the deal is fake. While Broadcom may argue that its deal should be safe from a security inquiry, investors appear worried that may not be the case: its shares fell 1.9 percent on Wednesday, and hadn’t fully recovered in early trading on Thursday.